By Hao Nguyen, Esq.
Senior Product and Regulatory Counsel
We’ve all heard of those investigative segments on the local news channel before, right? Unless we are keen on local news affecting our community or just finding something to break the ice around the office water cooler, these stories tend to resonate within the local community. However, every once in a while, there’s a case that breaks the local bubble to eventually make national headlines. We think we stumbled upon such a story.
It All Started in April 2022
WPLG Local 10, a local ABC news affiliate out of Florida, broke a story in 2022 about some distraught customers paying for undisclosed fees during a lease buyout. Handled through the news channel’s investigative team, the interviews, reports, and stories would soon catch the attention of the Florida Attorney General’s Office and lead to subpoenas filed against three new car dealerships, as well as their captive finance companies, only six months later in November.
What Happened?
Allegedly, when customers wanted to buy the vehicles at the end of their lease, the dealerships charged them hundreds (and in some cases thousands) of dollars in undisclosed fees. These fees included dealer prep fees, filing fees, pre-delivery service fees, and doc fees that were never initially discussed with the customer during the lease’s inception.
Outcome
The Florida AG found the dealerships to have violated local laws regarding deceptive and unfair trade practices as well as the federal Consumer Leasing Act. Without admitting guilt, these dealerships agreed to pay the AG a combined $673,000 to settle the cases. Additionally, they must refrain from imposing any fees not disclosed in the original lease during the lease buyout process in addition to the hefty penalty.
Why Is This Notable?
It is important to remember that the source of these particular fines and penalties do not only come from “inside the house” (i.e. from a current or past employee), nor the state or federal enforcement agency. Here, this entire investigation didn’t start with a disgruntled employee or an enforcement official with a personal vendetta. Rather, it started with upset customers who thought they paid too much and went to their local news station for relief.
Is this a Sign of Things to Come?
Possibly. As they become more savvy about the car buying process and educated about their own rights, new and past customers become the third source of what can potentially keep you up at night. Even if these upset customers lack firepower individually, what is stopping them from going to a plaintiff’s attorney or even their local news station or newspaper to give them a story to break?
Questions?
We highly encourage all dealers to review their sales practices and train (or retrain) their staff accordingly to make sure that they follow all state and federal laws. If you have questions about how ComplyAuto Guardian, our newest sales and finance compliance tool, can be leveraged to effectively and efficiently reinforce your entire sales process, please contact us at info@complyauto.com or visit our website at www.complyauto.com/guardian.